What withdrawing cash from a credit card actually costs you
You can withdraw cash from a credit card at an ATM, but it is not the same as using your debit card. The moment you take out cash, your credit card company charges you a cash advance fee — usually 3% to 5% of the amount withdrawn, with a minimum of $5 to $10. On top of that fee, you start paying interest when ready, often at a higher rate than your regular purchase APR. There is no grace period like there is for purchases. A $200 cash withdrawal that costs $10 in fees will cost you another $3 to $5 per month in interest if you do not pay it back within 30 days.
Most people should avoid this entirely. If you need cash, a debit card withdrawal from your own bank account costs nothing. If you do not have a debit card or your account is empty, there are cheaper ways to get cash than a credit card advance — a personal loan, a cash-back purchase at a store, or borrowing from someone you know.
The only time a cash advance makes sense is if you are in a genuine emergency, have no other option, and can pay the cash back within days. Even then, you are paying for the privilege.
Key Takeaways
- Cash advances charge a separate fee (usually 3% to 5%) plus a higher interest rate than regular purchases, with no grace period.
- Interest on a cash advance starts accruing the day you withdraw it, not at the end of your billing cycle.
- You can withdraw cash at any ATM that accepts your card, but the ATM operator may charge an additional fee on top of your credit card company's fee.
- Paying back a cash advance does not reduce your credit card balance as quickly as a regular payment would, because the interest compounds faster.
- Debit card withdrawals, store cash-back, or personal loans are almost always cheaper than a credit card cash advance.
How to physically withdraw the cash
The mechanics are straightforward: find an ATM that displays your card's logo (Visa, Mastercard, American Express, Discover), insert your card, enter your PIN, and select "cash advance" or "withdraw cash." The ATM will show you the fee before you confirm. Some ATMs call it a cash advance; others just say "withdrawal." The result is the same.
You can use any ATM, not just your bank's machines. However, if you use an out-of-network ATM, you will pay two fees: one from your credit card company and one from the ATM operator. That second fee is often $2 to $3 on top of your card's percentage-based fee. Your credit card statement will show both charges separately.
There is usually a daily limit on how much you can withdraw — often $500 to $1,000, depending on your card and your credit limit. Your card issuer sets this limit, and you cannot change it by calling them; it is a built-in safety measure.
The fees and interest that make cash advances expensive
A cash advance fee is charged the moment you withdraw the money. If your card charges 4% and you withdraw $300, you pay $12 when ready. That $12 is added to your credit card balance.
Interest starts accruing right away — there is no interest-free period like there is for regular purchases. If your cash advance APR is 25% (which is common), you are paying roughly 0.07% per day on the $300, or about 21 cents per day. After 30 days without paying it back, you owe an additional $6 in interest, on top of the $12 fee. After 60 days, you owe roughly $12 in interest.
The interest rate on a cash advance is usually 2% to 5% higher than your regular purchase APR. If your card charges 18% for purchases, the cash advance rate might be 23% or 24%. This higher rate applies only to the cash advance portion of your balance, not to regular purchases.
When you make a payment to your credit card, the payment is typically applied to the lowest-interest balance first — your regular purchases — and only then to the cash advance. This means your cash advance sits there accruing interest while you pay down other balances. Always check your statement to see how your payment was applied.
When a cash advance might be necessary
A cash advance is a last resort, but there are rare situations where it makes sense. If you need cash for a genuine emergency — a car repair to get to work, a medical copay, a security deposit — and you have no other way to get it, a cash advance is faster than a personal loan and does not require a credit check like a payday loan would.
The key is to pay it back as fast as possible. If you can repay the cash advance within a week, the interest cost is minimal — maybe $1 to $2. If you cannot pay it back within two weeks, the cost starts to outweigh the benefit, and you should explore other options instead.
Do not use a cash advance to fund regular spending, to pay other debts, or to cover a shortfall you expect to last more than a month. Those situations call for a different solution: a personal loan, a payment plan with a creditor, or a conversation with a financial counselor about your budget.
Alternatives that cost less
Debit card withdrawal: If you have a checking or savings account, withdraw from your own money. No fee, no interest, when ready.
Cash back at a store: When you buy something with a debit card at a grocery store or pharmacy, you can ask for cash back. The store gives you the difference between your purchase and the amount you withdraw. No fee, no interest.
Personal loan: If you need $500 or more and have a few days, a personal loan from a bank, credit union, or online lender usually has a lower APR than a credit card cash advance. You pay interest, but not when ready, and the rate is often half what a cash advance costs.
Payday loan: A payday loan is expensive and should be avoided, but it is still often cheaper than a credit card cash advance if you can repay it within two weeks. A payday loan charges a flat fee (usually $15 to $20 per $100 borrowed), which works out to roughly 400% APR. A credit card cash advance at 25% APR with a 4% upfront fee is actually worse if you need the money for less than a month.
Borrow from someone you know: If a friend or family member can lend you cash, that is free and the fastest option of all. Make a written agreement about when you will repay it, even if it is informal.
How a cash advance affects your credit score
A cash advance does not hurt your credit score directly — there is no separate reporting for cash advances. However, it does increase your credit card balance, which raises your credit utilization ratio — the percentage of your available credit you are using. If you have a $5,000 credit limit and you withdraw $500 in cash, your utilization jumps from 0% to 10%, or from 50% to 60% if you already had a balance.
A higher utilization ratio can lower your credit score by 10 to 50 points, depending on how high it goes. The effect is temporary — as soon as you pay down the cash advance, your score recovers. But if you carry the cash advance balance for months, the damage lingers.
The bigger risk is that a cash advance signals financial stress. If you are regularly taking cash advances, it suggests you do not have emergency savings and are relying on borrowed money to cover gaps. That pattern, over time, can make lenders see you as riskier, which can affect your ability to get a loan or a better interest rate in the future.
Paying back a cash advance faster
Once you have withdrawn cash, your goal is to pay it back as quickly as possible. Make a separate payment specifically for the cash advance, not just your regular monthly payment. When you call your credit card company or log into your account, ask how much of your balance is cash advance and how much is regular purchases. Pay the cash advance portion first.
Some cards let you set up automatic payments. If yours does, set up a payment for the full cash advance amount to go out as soon as you have the money. Do not wait for your billing cycle to close.
If you cannot pay back the full amount within 30 days, stop and reconsider whether you should have taken the cash advance at all. At that point, the interest is compounding, and you are better off exploring a personal loan or a payment plan with whoever you owe the money to.
Frequently Asked Questions
Can I use a credit card to withdraw cash from my bank's ATM?
Yes, but it is still a cash advance, not a regular withdrawal. Your bank will process it as a cash advance from your credit card company, and you will pay the cash advance fee and interest rate, even though you are using your bank's ATM. Using your own debit card at the same ATM would cost nothing.
What is the difference between a cash advance and a balance transfer?
A cash advance is withdrawing physical cash from an ATM. A balance transfer is moving debt from one credit card to another, usually to a card with a lower interest rate. Both charge fees and have different interest rates, but a balance transfer does not give you cash in hand — it just moves the debt.
Will paying back a cash advance improve my credit score?
Paying it back will lower your credit utilization ratio, which can raise your score by a few points. However, the main benefit is avoiding months of high-interest charges. The credit score improvement is secondary to the financial relief of getting out of debt.
Can I withdraw cash from a credit card with no credit limit?
No. Your cash advance limit is set by your card issuer and is usually much lower than your total credit limit — often $500 to $1,000. You cannot change this limit by calling the company. If you have reached your cash advance limit, you cannot withdraw more until you pay some back.
Is there a way to avoid the cash advance fee?
No. The fee is automatic and non-negotiable. The only way to avoid it is to not take a cash advance. If you need cash, use a debit card, get cash back at a store, or borrow from someone you know.